PG&E to pay record fine for San Bruno

California's chief utility regulator on Thursday ordered Pacific Gas & Electric Corp to pay a record US$1.6 billion in fines and other penalties stemming from its deadly 2010 San Bruno natural gas pipeline rupture and fire near San Francisco.

The sum marks the largest penalty ever imposed by the five-member California Public Utilities Commission, dwarfing a US$38 million fine against PG&E for a 2008 natural gas explosion in Rancho Cordova, California, according to the agency.

Commission President Michael Picker said the order also ranked as "one of the biggest utility sanctions in US history."

PG&E Chairman and Chief Executive Officer Tony Earley said his company was still reviewing the ruling but did not expect to appeal it.

The latest penalties cover nearly 3800 violations of state and federal laws and regulations that two administrative law judges for the commission found in connection with PG&E's pipeline network, including the 2010 explosion.

The enforcement action includes an US$850 million shareholder penalty that would pay for gas transmission pipeline safety infrastructure; a US$300 million fine; a US$400 million billing credit to be spread across PG&E's gas customers; and US$50 million in other remedies to enhance pipeline safety.

As approved by the commission, the penalties must be borne entirely by PG&E's shareholders and may not be passed on to the utility's customers.When added to disallowances already adopted in a prior CPUC decision, the penalties and remedies would exceed US$2.2 billion, the commission said.

The pipeline explosion on 9 September 2010, in San Bruno, a city just south of San Francisco, destroyed an entire neighbourhood, killing eight people and injuring 58 others.

The blast, which killed eight people and levelled houses in San Bruno, Calif., was caused by a poorly maintained pipeline with faulty welding work that dated back to the 1950s.

Despite the hefty judgment, California’s Public Utilities Commission isn’t finished with PG&E. The commission’s members now want to open a new investigation into the safety culture at the San Francisco utility after finding that it neglected its vast network of gas pipelines for decades.

“We are deeply sorry for this tragic event,” said PG&E Chairman and Chief Executive Tony Earley, adding that the company is working to complete important safety work. “We do not expect to appeal today’s rulings.”

The state commission levied the biggest fine it could without jeopardising the utility’s credit rating, said Michael Picker, Chief of the California PUC.

Edited from various sources by Elizabeth Corner

Sources: Reuters, Wall Street Journal

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